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Conventional Loans: What They Are And Why They’re So Popular

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So, what’s a conventional loan?

Conventional home loans are a type of mortgage that is not guaranteed or insured by government agencies (like the Federal Housing Administration, the Department of Veterans Affairs, or the U.S. Department of Agriculture). Even though they aren’t backed by the government, conventional loans operate on a set of guidelines set by two government-sponsored entities: the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation. More commonly, referred to as Fannie Mae and Freddie Mac.

What makes conventional loans a great loan option?

There’s a reason why conventional loans are so popular! A conventional loan is a flexible loan option that has several features that make it an appealing choice for many people. Depending on your circumstances, conventional loans can offer lower interest rates, a variety of down payment options, varying term lengths for fixed-rate mortgages, and reduced mortgage insurance (MI). If you put less than 20% down on a conventional loan and are paying MI, you typically have the option to cancel the MI when you reach over 20% equity in the property.

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Is a conventional loan the one for you?

If you’ve got strong credit, a steady income, and a larger down payment, conventional home loans could be a great option for you. But you don’t have to check all those boxes to qualify for a conventional home loan! Despite what many people think, conventional loans aren’t just for people with a 20% down payment. The great thing about conventional loans is that they often offer flexibility on the requirements based on your circumstances. Chat with one of our loan experts to see if you qualify for a conventional loan.

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